Why Apple shares are selling off

Harvard Law School Distinguished Fellow Vivek Wadhwa on the future of Apple and Google employees staging a walkout.

Apple shares were selling off in early trading Friday as Wall Street reacted to the tech giant’s weaker-than-expected holiday sales guidance and an announcement that it would no longer report the number of iPhone it sold on its quarterly earnings reports.

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Analysts have long used iPhone unit sales and average sale price to gauge the overall health of Apple’s business, given the smartphone’s importance to the company’s overall results. Apple has raised the prices of its high-end iPhone models in recent years to offset slowing unit sales growth and sagging demand for smartphones.

“As demonstrated by our financial performance in recent years, the number of units sold in any 90-day period is not necessarily representative of the underlying strength of our business,” Apple CFO Luca Maestri said during an earnings call, noting that the company’s competitors did not disclose unit sales information.

The disclosure is weighing on Apple’s stock despite strong fourth-quarter results that saw the company report record quarterly revenue and earnings per share. Shares fell more than 6 percent – a decline that, if it holds, could threaten Apple’s status as the only U.S. company with a valuation of more than $1 trillion.

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Apple’s sales guidance for the critical holiday season also spooked investors. The company said it expects first-quarter revenue of $89 billion to $93 billion, slightly below Wall Street’s expectations for the quarter.

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But most Wall Street firms were fixated on the future omission of unit sales data. Analysts will now have to estimate how many iPhones, iPads and Macs were sold based on revenue.

“Apple might not think it’s helpful to report unit data for its products, but we do,” BTIG analysts wrote in a research note. “More data is better than less data. There is rarely an exception to this.”